How To Calculate The Rate Of Return | Jobs And Careers

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# How to calculate the rate of return

Yield or margin - a relative measure of economic efficiency, which shows the degree of usefulness of money, materials, labor and natural resources. This indicator is usually calculated when analyzing the financial condition of the enterprise and has a direct impact on the investment attractiveness.

## Instruction how to calculate the rate of return

Step 1:

the yield ratio is calculated as the ratio of profits of the enterprise to its assets, the available resources. The indicator you can express and profit from the specific output per unit invested in it for funds or profits, which brings with it every received currency. For convenience and clarity, the percentage of use.

Step 2:

Identify sales profitability. This indicator expresses the quality and correctness of the policy or the definition of price by now, but also shows the company's ability to control their own costs. Calculate the return on sales by dividing the company's net profit in the amount of revenue. yield ratio, which shows the share of the profits earned in each currency unit, usually calculated as a ratio of net profit after tax for a certain period of time in terms of money sales for the same period of time.

Step 3:

Different approaches to the competition and let out a feasible product lines form the large differences in terms of profitability of sales of different companies. Please note that even if the revenue performance, cost and profit before taxes in the two companies are the same, the profitability of sales can vary greatly due to the influence of the amount of interest paid on the amount of net profit.

Step 4:

In the analysis of the activities necessary to be able to calculate, and other indicators of profitability of the enterprise. For example, the return on assets is calculated as the ratio of operating income to average over a certain period of the size of total assets. The result of calculations shows the ability of the company's assets to make a profit.

Step 5:

Return on equity - the ratio of net income from investments to the average size for a certain period of their capital. Return on invested capital - the ratio of net operating income to average over a certain period and its loan capital. Yield production - is the ratio of net profits from the product to its full costs. The yield on fixed assets - ratio of net profit to the amount of fixed assets.